ACCT 2210 Exam 4 Miller
Which category should the following measure be placed in? Average number of workplace accidents per employee
Learning and Growth
Which category should the following measure be placed in? Average training hours per employee
Learning and Growth
Which category should the following measure be placed in? Employee Absenteeism Rate
Learning and Growth
Which category should the following measure be placed in? Number of job applicants from under-represented groups
Learning and Growth
Measures on a balanced scorecard typically fall into one of these four categories
Learning and Growth, Internal Business Processes, Customer, Financial
What is the point of a balanced scorecard
Management translates its strategy into performance measures that employees understand and influence.
Overall Equipment Effectiveness (OEE)
Measures the productivity of a piece of equipment in terms of three dimensions—utilization, efficiency, and quality.
________ is an example of an internal failure cost.
Net costs of scrap
Costs that have been incurred and cannot be eliminated regardless of the alternative chosen are ________.
Sunk Costs
Limitations of quality cost information
- Simply measuring and reporting quality cost problems does not solve quality problems. - Results usually lag behind quality improvement programs. - The most important quality cost, lost sales, is often omitted from quality cost reports.
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Inspection of goods
Appraisal
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Product Testing
Appraisal
_________ are sometimes called inspection costs.
Appraisal costs
Keys to increase utilization rate
Avoid machine breakdowns and minimize average setup times
Keys to increase efficiency rate
Avoid minor work stoppages, retaining and properly training operators to run and regularly maintain the machine
Which category should the following measure be placed in? Percent of customers that strongly agree with the statement "Your employees treated me courteously"
Customer
Three categories of Customer Value Propositions
Customer intimacy, operational excellence, product leadership
Non-Value-Added throughput time
Inspection time + Move time + Queue time
Which category should the following measure be placed in? Delivery cycle time
Internal Business Process
Which category should the following measure be placed in? Lost sales due to out-of-stock merchandise
Internal Business Process
Which category should the following measure be placed in? Number of modular product designs
Internal Business Process
Which category should the following measure be placed in? Pounds of waste produced
Internal Business Process
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Disposal of production defects
Internal Failure
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Downtime caused by defects
Internal Failure
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Net cost of scrap
Internal Failure
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Rework labor and overhead
Internal Failure
Which type of costs are incurred because poor quality of conformance has occurred?
Internal and external failure costs
Actual run time this week: 5,655 minutes Machine time available per week: 6,500 minutes Actual run rate this week: 9.12 units per minute Ideal run rate: 12.00 units per minute Defect-free output this week: 9,675 units Total output this week (including defects): 12,900 units Compute the overall equipment effectiveness
0.4959
Actual run time this week: 5,655 minutes Machine time available per week: 6,500 minutes Actual run rate this week: 9.12 units per minute Ideal run rate: 12.00 units per minute Defect-free output this week: 9,675 units Total output this week (including defects): 12,900 units Compute the quality rate
0.75
Actual run time this week: 5,655 minutes Machine time available per week: 6,500 minutes Actual run rate this week: 9.12 units per minute Ideal run rate: 12.00 units per minute Defect-free output this week: 9,675 units Total output this week (including defects): 12,900 units Compute the efficiency rate
0.76
Actual run time this week: 5,655 minutes Machine time available per week: 6,500 minutes Actual run rate this week: 9.12 units per minute Ideal run rate: 12.00 units per minute Defect-free output this week: 9,675 units Total output this week (including defects): 12,900 units Compute the utilization rate
0.87
Wait time 14 Days Inspection time 0.6 Days Process time 5 Days Move time 0.4 Days Queue time 6 Days What is the throughput time
12 Days
Inspection time 0.2 days: Wait time (from order to start of production): 16.0 days Process time: 3.4 days Move time: 0.9 days Queue time: 3.5 days Calculate delivery cycle time
24 Days
Inspection time 0.2 days: Wait time (from order to start of production): 16.0 days Process time: 3.4 days Move time: 0.9 days Queue time: 3.5 days Calculate MCE
42.5%
Inspection time 0.2 days: Wait time (from order to start of production): 16.0 days Process time: 3.4 days Move time: 0.9 days Queue time: 3.5 days Calculate non-value added throughput time
57.5%
Inspection time 0.2 days: Wait time (from order to start of production): 16.0 days Process time: 3.4 days Move time: 0.9 days Queue time: 3.5 days Calculate new manufacturing cycle efficiency
75.5%
Inspection time 0.2 days: Wait time (from order to start of production): 16.0 days Process time: 3.4 days Move time: 0.9 days Queue time: 3.5 days Calculate throughput time
8 Days
Quality Cost Report
A report that details prevention costs, appraisal costs, and the costs of internal and external failures
Balanced Scorecard
A strategy performance management tool - a well-structured report used to keep track of the execution of activities by staff and to monitor the consequences arising from these actions.
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Depreciation of test equipment
Appraisal
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Field testing at customer site
Appraisal
External failure cost examples
Cost of field servicing and handling complaints Warranty repairs Lost sales
Prevention Costs
Costs associated with preventing defects before they happen
Appraisal costs
Costs of activities designed to ensure quality or uncover defects. Makes sure defective products aren't shipped to customers
Internal Failure Costs
Costs resulting from defects that are discovered during the production of a service or product.
External Failure Costs
Costs that arise when a defect is discovered after the customer receives the service or product
Which category should the following measure be placed in? Customer Defection Rate
Customer
Which category should the following measure be placed in? Number of customer referrals
Customer
Which category should the following measure be placed in? Percent of customers that strongly agree with the statement "Your company has a superior commitment to product safety"
Customer
_________ is the elapsed time from receipt of a customer order to when the completed goods are shipped to the customer.
Delivery Cycle Time
Which of the following statements about the construction of a balanced scorecard is not true? Each measure should contain a parenthetical + or - to indicate if the goal is to increase/decrease the measure It should be constructed such that it continually tests the theories underlying management's strategy It should include only the measurable financial ratios. It should be constructed such that it lays out a theory of how the company can take concrete actions to attain its desired outcomes
It should include only the measurable financial ratios
Which category should the following measure be placed in? Average mentorship hours per employee
Learning and Growth
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Cost of field servicing
External Failure
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Product recalls
External Failure
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Returns and allowances arising from poor quality
External Failure
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Warranty repairs
External Failure
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Warranty replacements
External Failure
Which category should the following measure be placed in? Average fuel cost per sales dollar
Financial
Which category should the following measure be placed in? Residual Income
Financial
Which category should the following measure be placed in? Return on assets
Financial
Which category should the following measure be placed in? Sales from New Customers
Financial
Is a decreasing total cost of quality considered good or bad?
Good
Use of quality cost information
Help managers see the financial significance of defects Help managers identify the relative importance of quality problems Help managers see whether their quality costs are poorly distributed
Which of the following statements about the categories of measures commonly included in a balance scorecard are correct? Financial results must be improved in order to improve customer satisfaction. Improving business processes is necessary to improve customer satisfaction. Internal business processes need to be improved before the company's employees are able to learn and grow. The company's employees need to continuously learn in order to improve internal business processes.
Improving business processes is necessary to improve customer satisfaction. The company's employees need to continuously learn in order to improve internal business processes.
The Four Categories of measures are linked to one another how?
On a cause and effect basis. (In order for a company to improve internal business processes, their employees must learn and grow. Improving business processes is necessary to improve customer satisfaction, and improving customer satisfaction allows us to improve financially.)
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Quality circles
Prevention
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Quality engineering
Prevention
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Quality training
Prevention
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Statistical process control
Prevention
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Systems development
Prevention
Classify the costs associated with each of these activities into one of the following categories: prevention cost, appraisal cost, internal failure cost, or external failure cost. Technical support to suppliers
Prevention
Total cost of quality =
Prevention + Appraisal + Internal + External
________costs are incurred to keep defects from occurring.
Prevention Costs
Which type of costs are incurred in an effort to keep poor quality of conformance from occurring?
Prevention and appraisal costs
Four Types of Quality Costs
Prevention, appraisal, internal failure, external failure
________ is an example of an external failure cost.
Product Recalls
Prevention costs examples
Quality training Quality circles (meetings to consider ways of improving production Statistical process control activities
Common Learning and Growth measures
Recruiting, Skills Development, Compensation and Advancement, Wellness/Safety, Job Satisfaction, Retention
Keys to increase quality rate
Reduce number of defective units produced as a percent of the total output
Product Leadership
Refers to a company providing superior value by offering a continuous stream of leading-edge products or services. Product leaders are open to new ideas and solutions and bring them quickly to the market.
Customer Intimacy
Refers to a company providing superior value by segmenting markets and tailoring products or services to match the needs of the targeted customers
Internal failure cost examples
Scrap, spoilage, rework
Appraisal costs examples
Testing and inspecting incoming materials Final product testing Depreciation of testing equipment
Throughput time defintion
The elapsed time from when production is started until finished goods are shipped. (Key measure in delivery performance)
OEE =
Utilization rate * Efficiency rate * Quality rate
Process time is the only
Value added time
Manufacturing Cycle Efficiency (MCE) =
Value-added time (process time) / throughput time
What of the following forms the basis for a financial advantage when making a business decision?
Whether the differential benefits exceed the differential costs
Strategy
a "game plan" that enables a company to attract customers by distinguishing itself from competitors
Customer value proposition
a cluster of benefits that an organization promises customers to satisfy their needs
Conformance Quality
a measure of whether or not a product meets its design specifications and is free of defects that degrade its appearance or diminish its performance.
Business Process
a series of steps that are followed in order to carry out some task in a business
Efficiency rate
actual run rate / ideal run rate
Utilization rate
actual run time / machine time available
A balanced scorecard should be constructed so that it...
continually tests the theories underlying management's strategy and so that it lays out a theory of how the company can take concrete actions to attain its desired outcomes.
Quality rate
defect-free output / total output
Operational excellence
involves a firm's focus on efficient operations and excellent supply chain management
Each measure on the balanced scorecard should maintain a...
parenthetical + or - to indicate if the goal is to increase or decrease the measure
Throughput time =
process time + inspection time + move time + queue time
Delivery Cycle Time =
wait time + throughput time
